In line with trends seen across the entire meat industry, Vion Food Group, a leading international producer of meat and plant-based alternatives, is adjusting its strategy in its main markets.
Focus on future-proof performance and sustainability
Vion is reviewing its operations in Germany and has developed a comprehensive set of measures to be implemented in 2024. This includes downsizing through divestments and closures.
As part of this plan, Vion intends to sell the cattle slaughterhouse and pre-packed facility in Altenburg as well as Ahlener Fleischhandel ham specialist to Tönnies Group. The pig processing plant in Perleberg is set to be sold to Uhlen GmbH. The corresponding agreements have been signed. The transactions are subject to customary regulatory approvals and certain closing conditions and are expected to be finalized in the first quarter of 2024. The contracts include the transfer of approximately 700 employees to the respective purchasing sides. Vion will maintain business relationships and fulfill all obligations until the final closure, ensuring a seamless transition period for all partners in the chain.
In line with the planned reduction in business operations in Germany, Vion made substantial efforts to identify a prospective buyer also for the Emstek pig facility, aiming to preserve the site. Regrettably, no acceptable offers were received during this endeavor. Therefore, Vion aims to close this location by the end of March 2024 at the latest. The intended closure will impact approximately 750 employees. Vion is committed to supporting these employees in transitioning to new opportunities and to exploring potential employment alternatives. Vion will also negotiate a reconciliation of interests and a social plan with the works council for the affected employees. The available slaughtering capacities in the northwest region will allow pig farmers to find new partners. Vion will engage with customers to explore individual solutions and continue meeting their needs through the remaining national and international network.
Vion’s commitment to people and sustainable development
“The intended steps in Germany hold significant implications for our employees, customers, suppliers, and business relationships. We therefore carefully considered the changes to make our operations more efficient and flexible on our journey towards a future-proof organization. We stay dedicated to building sustainable supply chains that connect farmers, customers, and partners,” outlines Ronald Lotgerink, CEO of Vion Food Group.
Challenges and strategic shifts in the European meat industry
European meat companies, especially in Germany, are facing severe competition from the USA, South America, and China on the global market. The outbreak of African Swine Fever (ASF) has not only led to the loss of significant export opportunities but has also intensified pressure on German meat companies. In response, the industry is focusing more on the domestic market, moving towards self-sufficiency. These changes, together with political and regulatory challenges in the agricultural sector, inflation, changing consumer behavior and other factors, resulted in declining herd sizes and high animal prices.
Consequently, the pork sector, in particular, is currently undergoing a restructuring to address overcapacities and manage livestock densities – nationwide, but especially in northern Germany. This restructuring occurs within a sales environment marked by a strong emphasis on affordable prices, even as the industry aims to adopt more sustainable practices, necessitating a shift towards higher pricing. The beef sector faces a similar situation, experiencing an annual decline in production. All these developments have led to the adjustment of Vion’s strategy in its primary markets and the current set of measures in Germany.